1MDB is all the reason you need to vote out Najib and BN

Just a few days away from GE14, with Dr Mahathir Mohamad leading the opposition charge towards Putrajaya, one gets the feeling that this will be a momentous occasion for Malaysia.

Older readers may recall a time back in the 1980s and the 1990s when Malaysia was internationally recognised as a model of stable, multicultural and developing country with an impressive economy.

Malaysia, respected and seen as a leader among Third World nations, was one of the fast-growing economies in the world, poised to challenge the then Asian Tiger economies of South Korea, Taiwan, Hong Kong and Singapore.

So much has changed since then. Today, Malaysia makes international headlines for all the wrong reasons: corruption, corruption and more corruption, all linked to caretaker prime minister Najib Abdul Razak and the 1MDB scandal.

His administration has robbed Malaysians of everything – our wealth, our dignity, and the future that could have been.

If we were to attempt to compile a list of reasons to vote Najib and his ilk out, it would likely not be finished in time for polling day. Failing that, however, this is all the reason that you should: 1MDB, the biggest kleptocratic theft the world has ever seen.

Kleptocracy at its worst

As chairperson of the 1MDB advisory board, the finance minister, and prime minister, Najib held all the reins of power and was answerable to – laughably – himself. Over the span of five years, 1MDB became a cash cow, with over US$4.5 billion allegedly siphoned and laundered through countries like the United States, Switzerland, Singapore, Hong Kong, Luxembourg and others, according to the US Department of Justice (DOJ) investigations and forfeiture suits.

Using a complex web of subsidiaries such as a shady Cayman Islands fund worth US$2.32 billion and a shell company registered in the British Virgin Islands (BVI), billions of dollars were siphoned out for non-existing investments and contracts.

It is worth noting that of all the auditing firms brought in, all were either sacked for asking too many questions, or resigned after being unable to account for numerous transactions. Renowned accounting firms like Ernst and Young (sacked in 2009), KPMG (sacked in 2013), and Deloitte (resigned in 2016 after the US DOJ forfeiture suit was filed) could not even begin to handle the murky mess that is 1MDB. Even our own auditor-general’s report on 1MDB is sealed behind the hushed casket of the Official Secrets Act.

The numbers that we do know are staggering. RM 40 billion or more has been siphoned off from 1MDB, and RM 28 billion is completely unaccounted for (from the auditor-general’s report). The interest on loans and other fees owed by 1MDB could cost even more than RM10 billion.

The US DOJ is in the process of recovering assets, from luxury real estate and hotels to private jets, artwork, and motion picture companies, worth nearly US$1.7 billion allegedly acquired using these stolen funds.

This has ramifications for the Malaysian public as well. Having acted as the co-guarantor for US$3.5 billion worth of bonds sold by Goldman Sachs for 1MDB, the Abu Dhabi International Petroleum Investment Company (IPIC) hauled 1MDB into arbitration after their payments were diverted to the BVI shell company.

The Ministry of Finance had to step in to guarantee US$3.5 billion worth of bonds from 1MDB, despite previous statements from the government insisting that it was insulated from the debt fallout of 1MDB. Put in simple terms: taxpayer money is being used to pay off 1MDB’s debts because it is unable to meet them.

Debts and GST

Why does any of this matter to you? Never mind the fact that this mysterious Arab donor seems about as real and magnanimous as the genie from Aladdin, Najib and his ilk have not stopped at 1MDB. Mega-projects such as the Mass Rapid Transit (MRT) Lines and the East Coast Rail Link (ECRL) have had their budgets inflated and blown out of proportion, and loans taken out on them have saddled the public with debts for generations to come.

When announcing Budget 2011, all three MRT lines were slated to have a total cost of RM 40 billion.

As of today, the newly-launched MRT SBK Line alone has cost RM 21 billion; by MRT Corp’s figures, Line 2 (Serdang-Putrajaya) was estimated to cost RM 32 billion in 2012.  The project has long surpassed the initial cost announced by Najib seven years ago, and it can only go higher and higher.

Who will bear the cost in the end? Simple: us, the taxpayers.

Likewise, the ECRL, with a budget of RM 55 billion (which is inflated by nearly twice its actual price) is being funded by a loan from the Chinese state-owned Exim Bank, with the Malaysian government serving as guarantor. The money will then go to another state-owned enterprise, China Communications Construction Company (CCCC). Regardless of whether the project is successful, we will be forced to repay the loan plus interest within two decades.

Malaysia is in dire straits. With the treasury raided and loans plus interest galore to pay off in the coming years, Najib’s administration announced the introduction of the Goods and Services Tax (GST) in 2015, which has been a pain in the neck for all Malaysians in the years since. The reason behind the introduction is clear as day: desperate to pay off all these debts, the buck has been passed on to the taxpayer, a gift after years of corruption, economic mismanagement and crony enrichment.

To put things into perspective, government debt has grown at an average of 10.8 percent a year between 1997 to 2017 – as of September 2017, it has reached RM 687.43 billion. In stark contrast, the country’s revenue only grew at a measly 4.9 percent a year during the same time period. This is plainly not sustainable and all of the inflated mega-projects that have hit the headlines since then only serve to worsen the situation. The various loans taken out by 1MDB and the government are now the taxpayer’s problem via GST, and to top it off, there is interest on this as well.

If the BN government is allowed to retain power on May 9 and they continue spending at this unchecked rate, estimates place government debt at RM1 trillion by 2021. This country will be run into the ground, a failed state and made bankrupt, by those looking to enrich themselves – as they live the high life, while the rakyat is made to pay off the country’s debt.

Enough of leaders who can stuff themselves with quinoa while our shopping carts grow smaller every day. Another five years of a BN government will send our country into the abyss, and it is us
and the generations to come who will have to pay a heavy price for it.

By Eric Paulsen, Executive Director of Lawyers for Liberty